Trade-based money laundering flourishing

May 11, 2009 at 1:04 PM
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MIAMI, May 11 (UPI) -- International drug criminals are funneling hundreds of billions of dollars in profits through trade-based money laundering schemes, U.S. officials say.

A new report from the U.S. State Department's Bureau of International Narcotics and Law Enforcement Affairs indicates such schemes are at an all-time high while a Justice Department official says combating the laundering of black market cash through intentionally under- or overvaluing exports is a top priority, The Miami Herald reported Monday.

The newspaper said Lester Joseph, principal deputy chief at the Department of Justice criminal division, indicated to attendees at a recent anti-money-laundering conference in Miami trade-related laundering is one of the Obama administration's priorities.

"The front door of money laundering is the banking system," John Zdanowicz, a professor of finance at Florida International University, told the Herald. "The government has done a pretty good job of closing the front door, but the back door -- international trade -- is wide open."

Zdanowicz, who analyzes trade data for abnormally priced products, says it is easy for criminals working with overseas partners to intentionally undervalue exports which can then be sold by the recipient for full price, in effect, laundering drug profits.

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